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BRACH v. AMOCO OIL CO.

September 19, 1983

WILLIAM C. BRACH, PLAINTIFF,
v.
AMOCO OIL COMPANY, DEFENDANT.



The opinion of the court was delivered by: Shadur, District Judge.

  MEMORANDUM OPINION AND ORDER

William C. Brach ("Brach"), a lessee of a gasoline station owned by Amoco Oil Company ("Amoco"), sued Amoco for wrongful non-renewal of his franchise relationship under the Petroleum Marketing Practices Act ("PMPA"), 15 U.S.C. § 2802. In turn Amoco filed a counterclaim (the "Counterclaim") seeking both possession of the station and damages, charging Brach had wrongfully refused to vacate the premises after the lease and franchise relationship had been properly terminated. After remand of the case from our Court of Appeals' partial affirmance and partial reversal of rulings by Judge Joel Flaum (see 677 F.2d 1213 (7th Cir. 1982)), the action was assigned to this Court.

At this point the parties have filed three motions in connection with the Counterclaim:

1. Brach has moved for summary judgment under Fed.R.Civ.P. ("Rule") 56(b).

2. Amoco has filed a "Submission in Support of Back Rent Calculation," which seeks recovery of increased rent regardless of the propriety of the franchise termination. That "Submission" will also be treated as a motion for partial summary judgment on the Counterclaim under Rule 56(a).

3. Brach has moved for a jury trial on the issues posed in the Counterclaim.

For the reasons stated in this memorandum opinion and order, the first motion is denied and the second and third motions are granted.

Facts*fn1

Beginning in 1963 Brach and Exxon Company, U.S.A. ("Exxon") entered into a series of renewable one-year leases under which Brach operated a retail service station in Winfield, Illinois as an Exxon franchisee. Exxon last renewed the franchise November 1, 1976. By a succession of assignments, Exxon's interest in the premises was conveyed to Amoco in August 1977. Dissatisfied with Brach's upkeep of the station and the unprofitability of the relationship, Amoco notified Brach the lease would not be renewed upon its November 1, 1977 expiration but would be extended six months (to May 1, 1978) to afford Brach time to relocate his business.

Brach refused to surrender the premises on the May 1 expiration date, instead continuing his service station business as well as his monthly rental payments. Having already accepted Brach's rent for May, Amoco sent the following May 25, 1978 letter to Brach (emphasis added):

  Please refer to your lease covering subject
  premises dated 11/1/76, which expired on 11/1/77
  and which has been held over on a
  month-to-month basis. The purpose of this letter is
  to inform you that we do not elect to continue the
  existing lease arrangement with you and hereby
  cancel said lease effective June 30, 1978.

In a June 29 letter Amoco advised Brach it was obligated to continue gasoline deliveries pursuant to Department of Energy regulations but such deliveries would not constitute "a waiver of Amoco's demand for possession of the premises effective June 30." In August Amoco sent another letter to Brach informing him of a rent increase. Amoco later rescinded that rent increase (before it went into effect), continuing to accept Brach's rental payments (as prescribed in the original lease).

Some time in 1979 Amoco began negotiations for sale of the property to Brach, assertedly to enhance the profitability of their franchise relationship. Those negotiations eventually culminated in a binding real estate contract. Brach however was unable to secure the necessary financing, and in January 1980 he informed Amoco of his inability to consummate the transaction. On February 7, 1980 Amoco sent Brach a notice to quit the premises by May 31, 1980. Amoco enclosed a summary of the relevant portions of PMPA and explained Brach's inability to purchase the premises had prompted its decision to sever their franchise relationship. Brach again refused to leave the premises, and to date he remains in possession of his station.

Throughout the entire period Brach has been paying Amoco rent based on the per-gallon rate set in the 1976 Exxon lease agreement. Amoco never attempted to bring Brach into its Facility Value Rent Program (the "Program"). Under the Program Amoco (beginning in 1976) modified the rental provisions in its dealers' lease agreements in accordance with a nondiscriminatory nationwide formula calling for fixed monthly rental payments (rather than variable rent based on the number of gallons sold).*fn2

Procedural Background

On July 25, 1980 Amoco filed a forcible detainer action in the Circuit Court of Du-Page County, Illinois. Brach promptly filed this suit seeking an injunction against non-renewal, punitive damages and attorney's fees. Brach's Complaint asserted Amoco violated PMPA by failing to give a proper reason for and notice of nonrenewal. Amoco then filed the Counterclaim.

Judge Flaum (to whom the case was originally assigned) granted Brach's motion for summary judgment on the nonrenewal issue as well as his motion to dismiss the Counterclaim for lack of subject matter jurisdiction. Judge Flaum also granted Amoco's motion for summary judgment on the issues of (1) its compliance with the PMPA notification requirements and (2) the availability of mandatory injunctive relief under PMPA. Underlying those rulings of course was Judge Flaum's determination that PMPA governed the propriety of Amoco's nonrenewal. That determination in turn was based on an express finding that a month-to-month holdover tenancy had existed ...


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